The Ottawa real estate market has shifted in many ways over the last few months. One thing we are seeing more of is conditional offers being accepted by sellers. In some cases, a buyer is even able to make their purchase conditional upon the sale of a current property. This is great news for buyers who are relying on the funds they receive from the sale of their present home (or cottage or investment property) to finance the purchase of their next property.
There are two parts to this condition. The first part defines the subject property to be sold and gives an appropriate amount of time for the buyer to secure an accepted Agreement of Purchase and Sale (example below):
“SALE OF CURRENT PROPERTY: This Offer is conditional upon the sale of the Buyer’s property known as 123 Main Street, Ottawa ON, K1K 2A2. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 11:59 PM on November 30, 2022, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.”
The length of time given to sell the buyer’s property will change according to the average number of Days on Market in that area, and other factors. The buyer should expect the listing agent to ensure that their property is already listed on MLS (or very close to it), and that it is priced in a way that will promote a quick sale and sufficient sale price from a qualified buyer.
“Provided further that the Seller may continue to offer the property for sale and, in the event the Seller accepts another Offer satisfactory to the Seller, the Seller may so notify the Buyer in writing by delivery to the Buyer personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto. The Buyer shall have 72 hours from the giving of such notice to waive this condition by notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto, failing which this Offer shall be null and void, and the Buyer’s deposit shall be returned in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.”
Even after accepting an offer with this condition, the seller is allowed to continue to market their property for sale. If they accept another offer, they will notify the original buyer- at which point the original buyer can decide to remove their condition(s) and secure a firm agreement for the property OR walk away from the purchase without penalty.
If you are a buyer who will need this condition in an offer, this is a fantastic time to be in the market for your next home. Prices have softened since the beginning of the year, and supply in many areas is high enough that there are often multiple properties that fit your criteria. This condition can be a valuable tool for buyers, yet there is a lot to consider. The most important part of having this condition included in a successful offer is planning. Speak to your Realtor today about how best to plan your next move and leverage the current conditions to your advantage.
This blog was a contribution from our team member Colin Raines, Realtor®.
The market continues to slow as the rising interest rates work themselves through the market. There seems to be a standoff in the market right now. Buyers can’t afford early-year prices with the high-interest rates while some sellers are still holding out for prices that are simply not there anymore. In turn, many sellers are waiting for conditions to improve before selling. The buyers that are active are being very careful in their approach.
In most areas, we have entered a balanced market. We have left the seller’s market that has been for the past 5 years or so. Very interesting times. The next question to be answered is if we will retreat to a buyers’ market for the first time in a decade. That remains to be seen. The new listing inventory is still pretty low so the supply might not be there to get us into that market in the short term.
In terms of pricing, prices are stable for the most part with slight movement each month. This stabilization will help give buyers confidence that maybe our market has bottomed out. The bank of Canada holds that hammer in this regard. Another interest rate increase could change this but I don’t predict the large increases that we have witnessed over the past few months. I think it is important they protect the economy and hope that inflation will subside based on the cuts they have already made. Just my opinion as I am not an economist.
One thing is for sure it will be interesting to see how the rest of the year plays out. As always, if you have any questions or would like to know what’s happening in your neighbourhood, please reach out!
We are seeing a slowdown in the market as there are more options for buyers. With more choice and less pressure on buyer’s, we have seen the return of conditions, from financing to inspection to first right of refusal. This is very much a different market then this time last year. Residential sales are down 27% from this time last year, with condo sales down 28%.
The trend seems to be looking like a buyer’s market to the untrained eye, but this is coming from living through the extreme sellers markets of 2020 and 2021. With that as the recent comparison it would look like a buyer’s market, but the thing is, we are still slightly in a seller’s market leaning more towards a balanced market. How this is determined is by inventory. We are currently sitting at 3 months worth of inventory for a residential property, this is technically still a sellers market. It is when we see 4 months or more of housing inventory that it is a true balanced market, with 6 months or more of inventory being a true buyers market. This is a far cry from 2020 and 2021 when we were constantly sitting below 1 months worth of inventory.
Prices seem to continue to level off, with a residential freehold home averaging 5% more that August 2021 prices at $707,712. And a condo class property up 4% to $421,966.
As always, the market does differ from neighourhood to neighbourhood, please reach out if you would like to know how the market is affecting your area.
This month’s video update is a little longer than usual, and there is a great reason, we are in a complex market with a lot to discuss!
It has been a challenging housing market in Ottawa so far this summer. In July house sales were down 35% over last year, 840 units sold vs 1,307 in 2021. That is a substantial decrease as buyers continue to be extremely cautious as they have to deal with aggressive interest rate hikes and uncertainty with current economic conditions. It is a new market right now. One that is seeing the market return to conditional offers and more restraint with buyers. A balanced market is something that we have not experienced in years in our local market. All around it is a more sustainable market and one that is fair to both buyers and sellers. With the prices retreating considerably since the late winter market some first-time buyers now have prices within their grasp. With residential prices this past July up 4.5% and condo prices up 1.4% since July 2021 it seems the huge leap in prices has stalled. We have had a few clients reach out who had things on hold and are now re-engaging as they see this as a more manageable situation.
I do believe that with the new rates being quite a bit higher the government needs to step in and reevaluate their stress test. As buyers now have to qualify at huge rates as high as 7 or 8% to qualify for mortgages. This seems excessive.
As new listings get absorbed at a slower pace it puts less pressure on buyers as they have more to choose from. Sellers also need to be more patient as houses are taking longer to sell. I do see things starting to stabilize just in the past week or so as buyers are engaging and showing activity has increased slightly.
As always please reach out if you would like to know about market conditions in your neighbourhood.
I think everyone understands that the Ottawa real estate market is a much different landscape today than it was in February. The current prices feel similar to where they were last year without the bidding wars. A few people have asked if I think the market is going to crash or if there will be a correction. Well, the correction is already happening and I don’t see it going much lower depending on interest rates. Right now I am feeling a very close connection between prices and interest rates. More so than usual. Interestingly a home in March was purchased at a much higher price but way lower rate and it is quite comparable on a monthly payment to a similar home in today’s market selling at a lower price but with a much higher interest rate. Essentially affordability has not changed too much. Ottawa is weathering the drop in prices better than other market centres in Ontario. I expect the latest rate increase of 100 basis points which is the largest since 1998 to slow our market even further over the upcoming few weeks. I do think that the proposed hike in September will be lower than they have forecasted because the market has reacted and will continue to slow as a result of the Bank of Canada’s decision. Again, Ottawa will not be impacted as much as other major Canadian cities.
What are the main reasons for the price drop?
No matter what you seem to be doing, everything is more expensive! Combined with the rising interest rates that were brought in to curb this and the already high real estate prices and you have a perfect storm. Buyers can not simply afford the price gains we have been seeing. With the interest rate hikes, many have been priced out of the market. Then you get a looming recession and all the doom and gloom media coverage. The Ottawa market has never changed so fast in its history. 5 months has pretty well wiped clean the previous year’s gains. We also don’t have the pandemic-driven demand anymore.
Buyers are taking the wait-and-see approach
Buyers are engaged in the market and are looking at homes that are priced well. If sellers are priced at yesterday’s market they are not getting any activity at all. Buyers are also very much on the sidelines taking a wait-and-see approach. Many are trying to determine if they should wait a few more months as prices have been declining or lock-in on something now before interest rates move up more. Affordability could end up being the same.
What is the strategy to sell now? Hold offers?
It has been interesting talking to other agents about this and pricing strategies. For the most part pricing for multiple offers is not the desired strategy right now. Price the house well and get buyers through and sell it the traditional way. Some more patience is required as homes are staying on the market longer. With more competition, the way you present your home will be even more important as will your representation.
My thoughts on the market
My home has lost quite a bit of equity in the past 6 months. However, I have no plans to sell for 20 years so I really don’t care too much. Everything will go back up again eventually. I truly believe this correction was very important to the overall health of our market.
This is exactly where Ottawa needs to be right now.
The market has really changed drastically in the past 4 to 6 weeks. This is the fastest I have ever seen a market shift in my career.
Why has the market shifted?
There are really several factors at play right now. Interest rates have been steadily rising through the first half of this year. This of course is going to have an impact on the affordability of homes for buyers. Inflation and the cost of everything else have gone up and this leaves households with less money available for housing. Talk of a recession, the war in Ukraine, buyer fatigue, and the trillions of lost value in the stock market. These are all some of the factors involved. I also see the negative news that an imminent bubble bursting could happen with prices. Negativity tends to be news that sells. This certainly has an impact on qualified buyers and their reluctance to get into the market now. I don’t necessarily blame them either.
What should a seller do now?
What is not reported is that Ottawa is still in a sellers market. Sellers just don’t have the extreme leverage in the market that we have been accustomed to seeing. They need to be more realistic about the market they are in right now. Homes are not selling as fast and in many cases, buyers have conditions to fulfill. This is not necessarily a bad thing on either side. Sellers will adjust their prices to the current market and have to be patient as it’s taking longer to sell their homes. Houses are off their peak value but holding out for yesterday’s prices will not do any good.
What about buyers?
For buyers, there are more houses to choose from and better value out there right now. The challenge with buyers is timing. Many buyers have pulled back because they don’t want to buy near the peak of the market. Some are betting that the market will continue to decline and they will buy at a lower price. If there’s one thing I’ve learned in my career and as an investor. Never try to time the market. It just doesn’t work. This is advice from Warren Buffet. There is good value out there now and I believe the long-term prospects of Ottawa‘s market are good. This advice is only applicable to buyers not speculating in the market. If they are looking long-term I think now is a good time as any.
There’s a lot to navigate in Ottawa‘s real estate market right now. If you want to know what’s happening in your neighbourhood please feel free to reach out to our team.
The real estate market has shifted. There is no question we are not in the extreme seller’s market we experienced in February. Prices have slightly retreated from the peak. One of the biggest differences I am seeing is that buyers have been much more cautious. The recent interest rate hike and announcement of more coming have certainly played a major role. We have also seen an influx of new listings in Ottawa that is taking some of the pressure off the market. In addition to the new homes, we have sellers that want to keep trying to get prices that were out there a few months ago. So we see on the MLS lots more options. With the increase in inventory, buyers feel that if they don’t secure one place they will have an opportunity at another. They are also being spread out more with their offers.
Now that sounds a bit gloomy for sellers but it is not a reality statistically. We are still in a very strong seller’s market. It is just now one grounded in a sense of reason! Price escalation is tempered. Realistic sellers can expect to get great prices that they could have only dreamed about 2 years ago. The average sale price of a residential home is still up 11.6% and the average price of a condo is up 11% over April 2021.
Do you know one of the most common questions I’m getting right now about the real estate market is, are we at our peak? Or is the market starting to decline? It’s a tough question to answer because there are a lot of variables at play right now. We have interest rates rising by a half percentage point in the upcoming few weeks after a previous increase of a quarter of a percentage point just about a month ago. This is going to make the current prices in Ottawa that much higher for prospective homebuyers. This will certainly have an effect on what buyers are willing to pay for Ottawa real estate. My thinking is that house prices are going to stabilize. In fact, I believe that’s already happening. There are houses that sold in February of this year that would not warrant the same price in today’s market. The biggest reason being is that there are more houses for sale and buyers are spread out with more options available to them. My prediction is that you’re going to see continual stabilization of the market in the upcoming two months as more inventory comes to market I still think it’s going to be very much a sellers market but the days of 15 or 20 offers on almost every property I think are going to be behind us which is good for the overall health of our local real estate market.
We are up from the five-year average for total unit sales, which for March is 1,792. Prices are continuing to climb slightly, up 2-3% from February, sitting at $853,615 for a residential-class property, up 12.5% from last year, and $479,405 for a condominium-class property in March, up 10% from March 2021.
Overall, we are just slightly over (.6%) a half month’s supply of inventory, this is still considered a seller’s market. A balanced market requires at least four months of inventory.
Our team has strategies that can help both our buyers and our sellers in this type of market. Please reach out if you have any questions about the current market or anything else we can help with.
Things are picking up as we head into the Spring season. We have seen a 52% increase in transactions from January to February of 2022 via MLS. This is a strong indicator that the Spring market has sprung.
The number of new listings in February (1,762) offers some hope for prospective Buyers. At 4% higher than the five-year average and 12% higher than February 2021, it resulted in an almost 10% increase in residential-class property inventory compared to last year at this time.
There is hope that the trend of increased new listings will continue so that the housing stock can be replenished.
We are now sitting at less than a month’s worth of inventory, which is still looking like a seller’s market. This means buyers need to have all of their financing set up so that they can move quickly in this market.
Our team has strategies that can help both our buyers and our sellers in this type of market. Please reach out if you have any questions about the current market or anything else we can help with.
We are starting this February in very much a similar way to the last 2 years. Housing inventory in Ottawa is scarce and sellers are cashing in on this once-in-a-lifetime market. This year feels different because we are already starting with high prices thanks to the last few years of double-digit increases in Ottawa home prices.
Buyers seem to be comfortable paying huge premiums to get in on the market and secure their house. This is leading to some pretty eye-popping sales in certain neighbourhoods. We have had first-time home buyers spending upwards of a million dollars on a purchase. It is actually a frustrating market for a Realtor because there is quite a bit of heartbreak! Sellers in many cases can’t put their house up for sale because they can’t secure another property. So we are in this cycle! I am hopeful that we can get to a place this year of a more balanced market. I had originally predicted that prices would rise less than 10% this year. Is it too early to have a mulligan on this?
One of the biggest changes in our market is the number of properties selling for over 1M. Do you remember when 1M was a big number?
Sales in Ottawa over 1M
We have had one of the hottest real estate markets in the world in the past few years right here in Ottawa. We are making up for years of undervalued real estate. Now we are heading to a place where the average house is going to be out of reach for our middle-class families, especially those who are not in the market already with a house.